Manufacture test for packed compact discs: mere jewel-box packing did not alter essential character, and waiver followed on limitation.

Packing recorded compact discs in jewel boxes with labels and holograms was not manufacture because the discs were already complete and fit for use when received, and the packing did not change their essential character. Note 6 to Section XVI, which treats conversion of an incomplete or unfinished article having the essential character of the finished article into a finished article as manufacture, was held inapplicable on these facts. The Tribunal also found a strong prima facie case on limitation, noting that the activity had been intimated to the department. On that basis, waiver of pre-deposit of the demanded duty and penalty was granted.

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Issues: Whether the activity of packing recorded compact discs in jewel boxes with labels and holograms amounted to manufacture under the tariff, and whether the applicant made out a prima facie case on limitation for waiver of pre-deposit.

Analysis: The Tribunal held that the compact discs were already complete and fit for use when received, and that packing them in jewel boxes did not alter their essential character. Note 6 to Section XVI of the tariff, which treats conversion of an incomplete or unfinished article having the essential character of the finished article into a finished article as manufacture, was found inapplicable on these facts. The Tribunal also noted that the applicant had intimated the department about commencement of the activity and found a strong prima facie case on limitation.

Conclusion: The applicant was entitled to waiver of deposit of the duty and penalty demanded, and the matter was directed to be listed for hearing.

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